Statehouse Test is a weekly analysis of governors' inaugural and state-of-the-state addresses, and budgets, related to postsecondary education.

By

“After decades of funding our eleven campuses on the basis of past appropriations and past expenditures, we have lost track of the rationale for each campus’s funding level. We must begin a new approach to funding higher education where we ask the board of higher education to develop a funding methodology that is based on the outcomes that education leaders and citizens would like to see from their college campuses.”-- North Dakota Gov. Jack Dalrymple’s Jan. 4 state of the state address.

***

Faced with a 5 percent tuition rise and the likelihood of future increases, students at the City University of New York filed a lawsuit against the school protesting the tuition hike. Could we be on the verge of a student movement like that recently under way in England, where rioters incensed over tuition increases have thrown Molotov cocktails, smashed windows, and even attacked Prince Charles’s car?

CUNY’s was a modest hike, with average prices remaining well below the national average. CUNY takes pride in its history of serving low-income and first-generation students with a high-quality, affordable education.. But CUNY, like many public institutions in the U.S., is doing what led to student revolts in England: shifting the burden of paying for higher education from taxpayers to students. According to the State Higher Education Executive Officers association, tuition in the U.S. increased from 25 percent of all educational revenue to 37 percent from 1984 to 2009, even as total spending per student remained about the same.

The fact that the U.S. has made the shift incrementally, institution by institution, state by state, rather than as a matter of national public policy, may have spared us from the European-style riots. But it has prevented us from coming up with a clear alternative to universal education subsidies, as England has done with its need-based aid and conditional loan repayment schemes. Instead, states and institutions have been left to come up with their own scattershot aid policies, which are often well-intentioned but inefficient and inadequate.

Fear of debt and complex financial aid is paralyzing

Families are predictably confused and frightened by the result. In a recent College Board-commissioned opinion survey, overwhelmingly parents and students understand that college opens doors to more economic opportunities and a more successful life, but most believe the cost is out of reach or worse, have no clue how much college costs. The complexity of financial aid formulas is seen as an impenetrable code. Fewer than half (46 percent) of parents surveyed in the survey, “Cracking the Student Aid Code: Parent and Student Perspectives on Paying for College,” were confident they knew the cost to attend a public college in their home state. Forty-four percent of Latino parents -- our nation’s fastest growing population -- indicated that they were aware of Pell Grants, compared to 80 percent of white students and 82 percent of African Americans.

Sadly, much of state spending is wasted when scholarships miss helping the neediest students. Georgia’s Hope scholarship, Florida’s Bright Futures, Tennessee’s Lottery Scholarships, and Louisiana’s TOPS scholarships represent millions of dollars distributed to students who could easily afford tuition, while many needy students, especially at community colleges, got nothing. The Georgia Hope scholarships have coined a new word -- “Hope mobiles,” the cars students buy with the money they’re not spending on tuition.

Governors would be pound-wise to better target scarce dollars, like the innovative, need-based performance scholarships in Oklahoma, Ohio, and Louisiana, which reward course completion and steady progress toward a degree -- not just enrollment.

Are tuition hikes the only option?

No one will dispute that state budgets are bad. But families are hurting, too. State leaders must resist reaching for the increase button at the first sign of economic bad news. Instead, they should look first underlying and systemic inefficiencies in higher education that impede students from getting the degrees they need for success.

As we listen to state of the state addresses and watch budgets roll out, we should be looking to see whether governors and legislatures are using the current crisis as a policy opportunity, or risking making a bad situation even worse.

New Jersey Gov. Chris Christie wants to do away with a cap in tuition increases at the state's public universities. Is New Jersey defaulting on its responsibility to have a coherent and effective college affordability program, or will he propose a meaningful alternative? Watch for Nevada Governor Brian Sandoval’s address this week. Will he link steep tuition increases with serious college completion goals and a commitment to increasing need-based aid?

Unlike most states, North Dakota is enjoying a healthy budget from an oil boom. Incoming Gov. Jack Dalrymple is seizing the opportunity to fundamentally change the way higher education institutions are funded to reward outcomes that ensure more students can affordably earn a degree. North Dakota could go further and use some of its enviable resources to support aid policies that create the same opportunities and incentives for students.

Raising tuition is a difficult habit to break, but, as we enter a fourth difficult state budget cycle in a row, we may have just hit bottom. If the first stages of recovery are admitting there’s a problem and seeking a solution, states like North Dakota provide a good example.